U.S. trade deficit jumps to seven-month high

Imported cars are driven off a carrier ship at the Port of Long Beach. (Tim Rue / Bloomberg )

WASHINGTON -- A spike in American imports of consumer goods, autos and other products led to a sharp increase in the U.S. trade deficit in November from the prior month, the government said Friday.

One immediate implication of the unexpectedly big widening of the trade deficit, to a seven-month high of $48.7 billion, is that the U.S. economic growth rate for last year's fourth quarter is likely to be marked lower, probably closer to a measly 1% annual rate.

Yet the latest trade report may not be as bad as it looks. For one thing, the jump in imports of consumer products -- cellphones, pharmaceuticals, diamonds, clothes -- could indicate stronger demand and spending by Americans. Also, some of the imports include such things as Apple iPhones and iPads, which are assembled in China but whose value is largely retained in the U.S.

Further complicating November's trade figures from the Commerce Department is the apparent effect from Superstorm Sandy, which disrupted port activity on the East Coast in late October. The stronger imports might have included some catch-up in November because ships couldn't dock in the immediate aftermath of the devastating storm.

Still, the latest report shows some other underlying trends about the U.S. and global economy: American shipments to Europe, which account for more than one-fifth of U.S. exports, dropped 2.5% in November from a year earlier after falling 5% in the prior month, year over year. Despite a recent easing of the euro crisis, Europe's economy remains weak and isn't likely to give a boost to American manufacturers anytime soon.

Additionally, the value of U.S. imports of capital goods, excluding cars, was little changed in November from October, seasonally adjusted. That reflects soft American business investment, says Martin Schwerdtfeger, a senior economist at TD Bank. He expects business spending, which slowed in the second half of last year amid concerns about U.S. tax and budget policies, to pick up in the coming months, along with consumer spending. Coupled with a slightly improved outlook for global trade, that means the U.S. is likely to see a continuing pattern of rising exports but somewhat faster imports in the near term.

In November, the U.S. exported $182.6 billion worth of goods and services, while imports totaled $231.3 billion. The resulting trade imbalance of $48.7 billion was up from a revised $42.1 billion in October and due largely to widening deficits with Canada, Mexico and the Eurozone, notably Germany.

America's trade deficit with China narrowed in November. That's likely to be reversed in next month's report, however. China said earlier this week that its exports soared 14.1% in December while imports grew 6% from a year earlier, thanks partly to rising demand from the U.S. For the first 11 months of this year, the U.S. trade deficit in goods with China totaled $290.6 billion, up nearly 7% from the same period a year earlier.